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The Proposal To Change The Share Equity in GTFC
By: Bill Osborne
THE BOARD of directors of GTFC have called an extraordinary meeting of shareholders to make a decision that may affect the whole structure of the club and, in certain circumstances, could provide the means for a battle for control in the future, depending upon the option the shareholders choose.
The Chairman, Mr. Peter Furneaux, in a recent press release said: "The share issue is always a complicated affair. What it actually boils down to is that in order for new shares to be issued the board has to have a mandate from the shareholders of 75% of the shares.
In reverse, it could be said, that holders of 25% of the Club's shares voting against this, could cause the Directors not to be able to issue shares and bring money into the club.
In effect, let's say we've got 800 shareholders, 91% of them own only between 1 and 100 shares.
As few as three people voting together could constitute 25%, and therefore these three people, really run the club, and can determine its future. If they vote against it the Directors cannot issue shares, and money cannot come into the club.
A simple way to put it is this: really we all subscribe to the football club, and in fact it's a collecting tin which we rattle in front of people and say 'Would you help us?' A lot of people want to.
These three people could in effect say, 'no, we don't want to subscribe', which we quite understand, 'but we're not going to let anyone else subscribe either. So take the tin away.'
I think this is very unfortunate, and is hysterical in the way that it has gone, but from a personal angle, I would like people to look at what is good for the football club. Because what is good for the football club is good for the majority of the shareholders, irrespective of the number of shares that they own." END.
IT IS NOT CLEAR if the board are recommending any particular option but there is a clear danger to the existing shareholders position if the proposed additional shares are sold on the open market rather than on a 1 for 1 issue to existing shareholders.
If shares are sold on the open market to people who are not presently shareholders, it will erode the percentage of shares held by current shareholders and could weaken the current power base.
Although there are some who might seize the opportunity to take advantage of that situation, even those current shareholders who might be tempted to do so, would first have to obtain shares equal to their present holding to simply maintain their current percentage holding.
In fact, the board will need to gain a 75% shareholders consent to exempt them from section 89 of The Companies Act, which prevents them from selling shares in the open market without first offering an equal or better offer to current shareholders than that offered to non shareholders. (The notes relating to this particular proposal are in part two of this article)
It would be safer, in my view, if the board were to recommend to shareholders a 1 to 1 offer to current shareholders and any excess shares and those not taken up to be offered on the open market, if they expect the shareholders to grant them the dispensation they are seeking.
I cannot see major shareholders, some of whom have been investing in the club for a great many years, allowing their own shareholding to dissipate and, if the board are serious about widening the share issue, then the 1 to 1 issue with excess shares sold to non shareholders, may be the only acceptable format to current shareholders.
Whatever the result of this meeting, things will not quite be the same again at Grimsby Town Football Club and whatever changes take place, the fans and supporters will be looking towards a more successful future.
This is a good move, in my opinion, by the board to increase the level of shareholdings and bringing extra income to the club. This move coupled with the board's aim to ensure the club remains financially viable, is a welcome step towards moving the club forward.
All we need now is a new stadium but that is another story!
Part two Click here!
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